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Wednesday, July 20, 2011

Rupert Murdock Fails Management 101

Rupert Murdock apologized profusely today in response to accusations form the UK parliament but accepted no responsibility for all that happened under his watch as the leader of News Corp. Rebecca Brooks similarly seemed to suggest that her lack of awareness of the scandals absolves her of any responsibility.These remarks are particularly striking because they naively overlook the influence of institutions on the behaviour of individuals.By institution I mean the business itself that possesses an intricate array of complex systems and processes that shape norms, standards, belief systems, and principles resulting in collective behaviour and a well-defined and highly influential culture. Consider an organization's aggressive reward systems or promotion criteria that elicit a highly aggressive competitive environment or internal norms related to unethical behaviour that leaders endorse or ignore. As Noam Chomsky put it in describing the behaviour of organization members of particularly psychopathic corporations:

“When you look at a corporation, just like when you look at a slave owner, you want to distinguish between the institution and the individual. As individuals they may be nice to their slaves, benevolent, friendly, nice to their children, caring about other people. But in their institutional role they may be monsters, because the institution is monstrous” (Chomsky from The Corporation).

Decades of research has concluded that leaders, executives, and managers shape and mold the culture of their organizations through the institution of these systems and structures and, most importantly, through their own behaviour.In explaining the downfall of Enron, “The Smartest Guys in the Room” nicely showed the similarity between the leadership style of President Jeff Skilling and the highly competitive and aggressive behaviour of their traders.The aggressive culture created by Enron leaders transcended to other parts of the organization.Management research would therefore predict that these traders may not have engaged in similar behaviour in another organization under a different culture.

The influence of leaders on the behaviour of their organizations is undeniable.Although Murdock might not have known about particular scandals, there is no question that he is indirectly responsible for the behaviour of his employees.In fact, I would argue that Murdock’s molding of News Corp’s culture is more destructive than his role in choreographing any individual hacking initiative.To absolve responsibility as a leader in situations like these ignores the fundamentals of Leadership 101.Rupert presumes that organizational culture is irrelevant and that individuals behave through their own devices.Large organizations are complex and leaders of these organizations accept a risk and responsibility of the actions of the organization. Otherwise, they do not belong in these positions.